Case Study: Macy’s Private Label

1 Jacqueline Supman Merchandise Strategies case study : Macy's Private Label Macy's current hodgepodge of brands, products and attempts to boost sales while focusing on spokespeople is no coincidence. The backbone of the strengthening the department store's point of retail giant has always been bringing together the difference, the retailer launched My Macy's which best selection of goods and services through focused on localized initiatives for target markets. In partnerships and collaborations, starting in 1929 addition to the new marketing incentive, Macy's with Fred Lazarus, the puppeteer behind F&R consolidated its offices down to 69 geographic Lazarus and the John Shillito Company (which was districts, which made up eight regions, which saves the oldest department store at the time). Fred the company around $400 million every year. famously arranged a meeting with Walter Rothschild (of Brooklyn-based Abraham & Straus), Today Macy's and Bloomingdale's encompass 850.

2 Louis Kirstein (of Filene's) and Samuel stores in 45 states, generating $25 billion in annual Bloomingdale (head of namesake company sales from men's, women's, and children's apparel Manhattan's Bloomingdale's) and decided to merge accessories, cosmetics, and home furnishings. With their stores into one. Rothschild, and Kirstein twelve Private Label brands, exclusive partnerships quickly agreed on the spot, and Bloomingdale joined with fellow powerhouse brands such as Tommy the next year. 1 The company's headquarter location Hilfiger, Martha Stewart, Elle Tahari, Oscar De La was set up in Cincinnati in 1945 and over the next Renta and Donald Trump, it's more than evident that thirty years additional locations popped up in major Macy's has an audience and knows exactly what they cities across the The Federated company want, and when they want it. So who exactly is continued to purchase department stores over time, grabbing a piece of Macy's retail pie? Kantar Retail but it was not until the 90's that the company bought explains that the retailer is aiming to target an 50% of the existing Macy's debt, setting the company affluent and younger demographic, with the hopes up for acquisition within the next two years.

3 Of catching the attention of upper middle-class shoppers. According to their research, the current The first Macy's store opened in Manhattan in 1858 Macy's shopper is around 46 years of age, Caucasian by a gentleman named Rowland Macy. Forty years and has a household income of $82,570. Overall, later after the death of Rowland, Macy's was bought Macy's target customers are primarily older parents by the Strauses, who expanded the retail empire or working older couples who are college educated 2 . across the Unfortunately after taking the While these metrics are important for company Private in the late eighties, the retailer understanding the core Macy's shopper, Macy's also suffered from high debt and filed for bankruptcy in focuses on understanding the individual target 1992. By 1995 Federated had purchased the market for each of its Private Label brands, which company and renamed its own stores Macy's, generate 19% of the company's revenue 3 . The below expanding the brand's empire.

4 In 2005 the company section explores the target customer for Macy's added May Department Stores to its roster, which Private Label (s). brought on financial distress pre-recession. In 1 Macy's 2 Kantar Retail, Macy's 3 Alfani architecture. These folks consist of men and women between the ages of 35 60, are predominantly Alfani customers are as diverse as they are style Caucasian and live in major metropolitan cities or conscious explains Nancy Slavin, senior vice large suburban neighborhoods. Earning roughly president of marketing for Macy's Merchandising $90,000 annually, Hotel Collection devotees are Group. As the top selling menswear line at Macy's it older families who are eco-friendly and college and/. is easy to get the impression that the brand satisfies or graduate school educated. both sexes adequately 4 . The average shopper is between 25 50 years of age, is college educated, American Rag predominantly Caucasian (followed by Asian and African American) and is career oriented.

5 Alfani Seeking after Macy's younger demographic, shoppers earn an average of $70,000 annually and American Rag is a fashion-forward Label consisting live both in metropolitan and suburban cities. of men, women, and juniors denim and separates. Furthermore, the Alfani customer is made up of The typical junior shopper is between 13 19 years young families who look for staple pieces that are of age (earning below $20,000 annually) where the versatile vs. trendy. men and women's shopper is between 20 30 years of age (earning around $50,000 annually). Charter Club Ethnically diverse, American Rag shoppers live in urban and suburban cities, are mostly singles or Charter Club targets the All American woman who young couples and are college educated. Example appreciates comfort and style in one. The Private customers are technologically adept, inspired by Label offers sportswear, intimates, accessories, celebrity styling and early adapters to seasonal jewelry, bedding and bath, deepening the customer trends.

6 Loyalty throughout multiple categories 5 . The Charter Club woman is between the ages of 30-60, Green Dog Caucasian and married with a family. In addition, she is college educated, lives in a suburban setting, Deemed as the fuss-free children's clothing Label , and earns an average income of $60,000 annually. Green Dog attracts mom's looking to purchase easy She is a bit more traditional and conservative in how outfits at low prices. Primarily Caucasian , the Green she dresses but enjoys the leisure of shopping for Dog shopper is between 33 - 60 years of age and lives herself and her family. in suburban areas. Earning around $60,000. annually, Green Dog customers are college educated, INC have medium size families and are coupon driven shoppers. On the opposite end of the Charter Club spectrum is the INC shopper, which consists of females between Tools of The Trade the ages of 20 40 looking for affordable, trendy items. INC shoppers are technologically savvy, Providing quality cook and kitchenware, Tools of college educated, and work in creativity-based jobs The Trade (TTT) caters to men and women between such as marketing and advertising.

7 Racially diverse, the ages of 25 50, from novice chef to culinary INC shoppers dwell in major metropolitan cities expert. TTT shoppers earn $70,000 annually, are earning around $80,000 annually and are young Caucasian, college educated and live both in couples or young families. suburban and urban cities. The cook-happy customers encompass young to mid age families Hotel Collection who enjoy and respect stylish and attractive house- ware. Hotel Collection targets a very sleek, modern customer who has a high regard for design and 4 5 American Rag Merchandise Mix + Product American Eagle on the other hand promotes themed Assortment + Prices playlists titled AE College Radio to win over their customers and also partnered with music festival American Rag - Girls South by Southwest (SXSW). As a multi-channel brand, American Rag grabs audiences attention in-store, online and via catalog. The brand's marketing efforts cover everything from social media, to in-store concerts, web series, banner ads and print.

8 Incorporating the brand's love for music, the Private Label is one of many sponsors for large outdoor music festivals such as Lollapalooza and SXSW. In addition, American Rag partnered with band Good Charlotte in 2010 to not only perform live in 5 stores but to also create a capsule collection titled Mad Picks 6 where band-mates Benji and Joel Madden selected their favorite items from the line. American Rag - Boys Yet the collaboration of fashion and music does not stop at promoted events and appearances; in-store visual displays feature branded ads with a call-to- action to visit their online site ( ) to check out exclusive video content, music and more. Moreover, in-store, American Rag is cleverly merchandised to mirror the essence of the brand;. the vintage looks, variety of denim and indie separates are styled to reflect the carefree vibe of their target market. Utilizing the racetrack layout, customers can walk around the selection of merchandise easily and checkout / pay within the department.

9 American Rag hangs directly across from Material Girl and INC, both of which could be considered as competing labels to the brand. The value of the American Rag brand is that it seamlessly connects fashion to the indie lifestyle There is no question that Macy's as a whole is lead by its target consumers. To deepen the technologically proactive after examining the customer relationship, the brand launched brands use of Facebook, Twitter, mobile, online, RAGGED magazine, a free print publication that applications and exclusive iPad ads. Thus, in an spotlights the hottest names in music modeling the effort to increase sales and strengthen customer vintage inspired Label . Music is a large influence on loyalty, American Rag should grow their digital the brand, which helps differentiate the line from presence by focusing more on mobile and iPad competitors. For example, while competitor applications. Knowing that the brand's target Abercrombie is notorious for their upbeat music in- customer ranges between juniors young adult and store, the brand fails to connect to consumers the fact that 72% of teenagers use text messaging, beyond clothes and mildly racy ads.

10 Sending more than 100 texts per day 7 , American Rag has an open shot at connecting the brand to 6 7 consumers most personal form of communication. For example, the Private Label could hold a viral mobile sweepstakes where consumers are encouraged to text in and promote a keyword to their friends in order to earn additional entries into the sweepstakes. American Rag then adds the initial customer into their mobile CRM database plus however many of their friends the promotion is passed on to. The incentive of the sweepstakes (let's say tickets to one of the music festivals they sponsor) both engages the customer and fixes them to the brand. Last, through the use of online ads optimized for the iPad, American Rag could further promote video content such as backstage access to exclusive artists and bands, articles from their branded magazine, or spotlight items from the season's collection. By providing targeted, exclusive content either through a mobile app or iPad ad, American Rag stands to deepen their share of the customer's wallet while also informing new consumers about their brand.